Germany–Switzerland
Topic 07Inheritance & Gifts between Germany and Switzerland
Inheritances and gifts with a Swiss connection can trigger German inheritance or gift tax even where the assets are located outside Germany. Key factors include the residence of the deceased, the donor and the recipient, the type of assets, previous German tax connections and Swiss cantonal taxation.
Overview
When does German inheritance or gift tax arise in cases involving Switzerland?
Germany does not only tax assets located in Germany. Where unlimited tax liability applies, the entire inheritance or gift can generally fall within the scope of German taxation.
The first step is therefore to establish whether the deceased, the donor or the recipient qualifies as an “Inländer” under German inheritance tax law. Certain German domestic assets may also remain taxable even where unlimited tax liability does not apply.
At the same time, it is necessary to assess whether Swiss cantonal inheritance or gift tax arises. If both countries impose tax, the available relief under domestic law and applicable treaty provisions must be analysed.
This topic from the Swiss perspective
TaxRep Switzerland covers German inheritances and gifts, focusing on Swiss cantonal taxation, German tax connections and cross-border succession.
Assessment Framework
Four levels of succession assessment
In Germany–Switzerland cases, personal tax liability, the type of assets, foreign taxation and tax relief should be assessed separately.
Personal tax liability
Does the status of the deceased, donor or recipient give rise to unlimited German inheritance or gift tax liability?
Identify the assets
Does the transfer involve cash, securities, real estate, business interests or other assets?
Swiss taxation
Does inheritance or gift tax arise in the relevant Swiss canton?
Relief & reporting
How should Swiss tax, German tax, the tax treaty, tax credits and filing obligations be coordinated?
Swiss assets can be fully subject to German tax.
Unlimited German inheritance or gift tax liability generally extends beyond assets located in Germany. Swiss bank accounts, securities portfolios, real estate and company shareholdings should therefore be included in the assessment.
Key Focus
Unlimited and limited German tax liability
For German tax purposes, the key distinction is whether a person qualifies as an “Inländer” or whether the transfer involves only certain German domestic assets.
What if the recipient lives in Germany?
If the recipient qualifies as an “Inländer” at the relevant time, the entire inheritance or gift can generally fall within the scope of German inheritance or gift tax.
What if the deceased lived in Switzerland?
German tax liability may arise even if the deceased lived in Switzerland, where the recipient or other relevant circumstances create a German tax connection.
What if there is no personal German tax connection?
Certain German domestic assets may remain taxable even where all parties reside abroad.
What rules apply to Swiss real estate?
Swiss real estate may initially form part of the taxable acquisition where unlimited German tax liability applies. In inheritance cases, the inheritance tax treaty must then be examined in particular.
What rules apply to shares in Swiss companies?
Shareholdings must be valued and may form part of the taxable acquisition where a personal German tax connection exists.
How is double taxation avoided?
In inheritance cases, the inheritance tax treaty is particularly relevant. For gifts, a foreign tax credit may be available under Section 21 of the German Inheritance and Gift Tax Act (ErbStG).
Common Questions
Tax allowances, valuation and Swiss assets
Which German tax allowances apply?
The amount depends primarily on the family relationship and the type of personal tax liability.
Do tax allowances also apply to Swiss assets?
Where unlimited German tax liability applies, personal tax allowances can generally apply to the entire taxable acquisition.
How is Swiss real estate valued?
German valuation rules apply for German inheritance and gift tax purposes. These may produce values that differ from Swiss tax valuations.
How are Swiss businesses valued?
Unlisted shareholdings generally require a separate business valuation.
What rules apply to a retained usufruct?
Retained rights of use may affect the taxable value of a gift and require legal and tax classification in both countries.
What should be considered for lifetime gifts?
Repeated gifts, tax allowances and the intervals between transfers should be considered as part of succession planning.
What notifications are required in Germany?
Depending on the acquisition, notification and tax return obligations may arise with the German tax office responsible for inheritance tax.
When should a cross-border gift be planned?
For real estate, company shareholdings and substantial assets, the German and Swiss tax burden should be modelled before the transfer.
Situations
Common inheritance & gift scenarios
The situation guides address specific circumstances: who lives where, which assets are transferred and what tax consequences arise?
Inheriting from Switzerland while resident in Germany
A Swiss estate, a recipient resident in Germany, German inheritance tax, the tax treaty and Swiss cantonal tax issues.
View situationReceiving a gift from Switzerland while resident in Germany
Cash, securities portfolios or other assets, German gift tax and Swiss taxation.
View situationInheriting Swiss real estate while resident in Germany
Swiss real estate, the inheritance tax treaty, exemption, progression and German valuation.
View situationInheriting or receiving shares in a Swiss AG as a gift
Business valuation, German tax liability, the tax treaty and limits on business property tax relief.
View situationMaking a gift before moving to Switzerland
German gift tax, the five-year rule, planning the use of tax allowances and future Swiss taxation.
View situationBusiness succession between Germany and Switzerland
Family businesses, permanent establishments, transfers of shareholdings, valuation and succession planning.
View situationIn-depth Articles
Detailed tax analysis of inheritances & gifts
These articles examine the legal issues relevant across different situations: tax liability, the treaty framework, double taxation, the allocation of estate debts, valuation and specific planning arrangements.
Germany–Switzerland inheritance tax treaty: which country may tax the estate?
Real estate, permanent establishments, other assets, Germany’s retained taxing rights, exemption, tax credits and German Federal Fiscal Court (BFH) case law on Articles 5 to 10.
Read articleUnlimited and limited inheritance and gift tax liability in cases involving Switzerland
Section 2 ErbStG, “Inländer” status, residence, habitual abode, German domestic assets and the scope of German taxation.
Read articleDouble taxation of inheritances and gifts between Germany and Switzerland
Treaty exemptions and tax credits for inheritances, Section 21 ErbStG for gifts and the distinction between the two systems of tax relief.
Read articleEstate debts under the Germany–Switzerland inheritance tax treaty
Mortgages, loans, economic connections, the allocation of estate liabilities and BFH case law.
Read articleValuing Swiss assets for German inheritance and gift tax
Swiss real estate, unlisted shares, securities portfolios, foreign currencies, fair market value and differences between Swiss and German valuation.
Read articleGifts with a retained usufruct between Germany and Switzerland
Retained rights of use over real estate and shareholdings, German valuation and cross-border gift tax planning.
Read articleExtended German inheritance and gift tax liability after moving to Switzerland
German nationals, the five-year rule under Section 2 ErbStG, the end of unlimited tax liability, subsequent limited tax liability and BFH case law.
Read articleRelated Topics
Further topics relevant to cross-border succession
Residence & Relocation
Moving to Switzerland and personal tax connections.
Explore topicInvestments & Withholding Taxes
Inherited Swiss securities portfolios and investments.
Explore topicBusinesses & Shareholdings
Business succession and Swiss shareholdings.
Explore topicReal Estate
Swiss real estate acquired by inheritance or gift.
Explore topicGermany–Switzerland Tax Advice
Are you expecting an inheritance from Switzerland or planning a cross-border gift?
We advise on German inheritance and gift tax, the Germany–Switzerland inheritance tax treaty, Swiss assets, real estate and shareholdings, valuation, double taxation and cross-border succession planning.
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